Publisher’s Note: Most smart international observers have been puzzled by Japan’s economic behavior over the last few decades. The country was supposed to be in recession, but didn’t really seem to be. Now, with the advent of Abenomics, the economic hoi polloi are mostly praising the results of increased spending, without being too critical of how it works in the long run.

True enough, as Scott Foster points out in this quarter’s Asia Letter, it’s hard to be critical when all short-term metrics are up. On the other hand, there is always the long term.

In this Letter, Scott describes the missing pieces in this story: the economic benefits that have been accruing to Japanese export titans for decades, without showing up on the (domestic GDP) books. This is one of the biggest stories in global economics, and, as far as I know, it has only come out to date in past SNS issues, and in Scott’s writings.

If you want to understand Japan’s present and future – on and off the official balance sheet – you need to read Scott’s Letter this week. I think Japan is the sleeping tiger, and China the over-fed house pet. What do you think? – mra.